JDS snaps up E-Tek for $15 billion; shares soar

E-Tek Dynamics Inc. (Nasdaq: ETEK) shot up 33 percent Friday after rival JDS Uniphase (Nasdaq: JDSU) said it plans to buy the company in an all-stock deal worth roughly $15 billion, or $211.40 a share, a 56 percent premium on its Friday closing price.

E-Tek shares were up 44 to 179 7/8. The stock was already on a tear this month after strong second quarter results. Analysts bumped up E-Tek price targets sent shares up to a new high following the earnings.

JDS shares fell 3 51/64 to 188 25/64. The company has been on a shopping spree in recent months. In December, it agreed to buy Nepean, Ontario-based Oprel Technologies Inc. for an undisclosed sum. It will also complete its $2.8 billion all-stock acquisition of Optical Coating Laboratory Inc. in the first quarter.

Under the agreement, E-Tek holders will get 1.1 shares of JDS for every E-Tek share held and E-Tek, also a fiber optic equipment maker, will become a wholly-owned unit of JDS. JDS and E-Tek also said they have signed a mutual supply deal to let them immediately boost the supply of certain products to customers.

The companies said the decision to unite was driven by the unprecedented growth of the telecom industry and the insatiable hunger of telecommunications service providers for bandwidth. JDS, based in Nepean, Ontario and San Jose, California, said its union with San Jose-based E-Tek will allow the companies to increase growth and bring more volume and a broader range of products to customers.

The deal may still be subject to regulatory roadblocks given the dominant position of the two players in the fiber optic gear market, and is conditional upon E-Tek shareholder approval, the companies said.